Shree Sai Impex Vs Principal Commissioner of Customs (Preventive) (Madras High Court)
Conclusion: While securing the Revenue’s interest under Section 110A of the Customs Act, conditions for provisional release should not be unduly harsh. Requirement to furnish Bank Guarantee of ₹22 lakhs was modified with execution of bond of Rs. 22 lakh.
Held: Assessee had imported 24,893 kilograms of Viscose Knitted Fabric from China under a Bill of Entry. The goods reached Chennai Port and were moved to a SEZ warehouse. Assessee filed documents seeking clearance for home consumption. Customs authorities initiated an investigation alleging misclassification and undervaluation. Assessee’s husband was summoned to New Delhi, where his statement was recorded. To secure release of the goods, the department demanded differential duty of Rs. 29 lakh, which assessee paid by demand draft. Despite this, assessee later received a provisional release order from the Additional Commissioner of Customs. The order required payment of duty on the re-determined value, execution of a bond for Rs. 91 lakh, and furnishing of a Bank Guarantee for Rs. 22 lakh. Aggrieved by these conditions, assessee filed a writ petition before the Madras High Court. It was held that provisional release must safeguard Revenue, imposition of Bank Guarantee towards fine/penalty at pre-adjudication stage was harsh. Following earlier rulings in Green Line [2016 (340) E.L.T. 140 (Mad)] and Sri Venkateshwara Paper Boards [2022 (379) E.L.T. 310 (Mad)], direction to furnish Bank Guarantee was modified. Goods to be released on (i) payment of declared duty, (ii) payment of 50% of differential duty as per Department, (iii) execution of bond for ₹91 lakhs, and (iv) execution of additional bond of ₹22 lakhs in lieu of Bank Guarantee. The Court directed Customs to release the goods within seven days of compliance. The department was allowed to proceed with adjudication, and assessee was directed to cooperate.
